India’s Supreme Court on Monday pushed the central government to extend its new 30-percent trade-margin cap beyond cancer drugs to all medicines and medical products, saying steep hospital markups leave ordinary patients paying many times what medicines actually cost.
A bench of Justices Vikram Nath and Sandeep Mehta was hearing the case when the government said it had decided to cap trade margins on non-scheduled anti-cancer drugs at 30 percent of the maximum retail price (MRP) — a step the government said would save patients about ₹2,500 crore a year.
The court was unimpressed. “There is hardly anything to be happy about. There is actually nothing for the benefit of the patients,” the bench observed, questioning why price controls should apply only to cancer drugs when other medicines are also essential.
Justice Nath told the solicitor general that if the government could cap the margins on anti-cancer drugs, he failed to understand why it could not bring all medicines under the same regime. Reports of the proceedings said the court also suggested a uniform rule limiting the maximum retail price to no more than 16 percent above the price to the retailer.
The examples before the court were stark: a saline drip sold in the market for ₹270 against an actual cost of ₹11; a cardiac stent costing about ₹5,000 sold by hospitals for more than ₹25,000; and the common antibiotic Azithromycin sold at over ₹70 against an actual cost of about ₹28.
The government’s own affidavit acknowledged that hospitals buy medicines from manufacturers offering the highest trade margins and sell them to patients at MRP, with margins of 170 to 700 percent or more on cancer drugs — and 100 to 1,000 percent or more on hospital consumables.
The government urged caution. Solicitor General Tushar Mehta said margins could not be capped beyond a limit because higher margins helped medicines reach far-flung areas, and Additional Solicitor General Aishwarya Bhati said excessive intervention could hurt the availability of critical medicines. The court responded that if price-controlled medicines were not reaching patients, it was the government’s duty to make sure they did.
What happens next
An expert committee headed by the Director General of Health Services will identify the cancer drugs to be covered, and the National Pharmaceutical Pricing Authority will examine its recommendations before issuing a price notification. The government says the cap would cut the MRPs of cancer drugs by 20 to 70 percent.
This is a developing story: the case is still before the court, and the full margin-cap regime is not yet in force.
Why it matters
India’s patients often pay for medicines at hospitals where markups are highest — at the exact moment they can least afford it. A wider cap could meaningfully lower everyday medical bills.
Sources: The Hindu BusinessLine; LiveLaw.
